Which is better – loans or credit cards? | #WeNeedToTalkAboutMoney 055

Loans versus credit card which is best? It's something I've been asked quite a few times There is no definitive answer unfortunately it depends on individual circumstances and scenarios but as a general rule loans tend to be better than credit cards if you're taking out a form of long-term debt for something like a car something other than buying a house and the reason is twofold

Firstly there tend to be lower interest rates applied to loans than credit cards but it's also because credit cards are structured in a way where they try and entice you to pay only the minimum amount Whereas loans you pay back the interest and capital as agreed at outset So what tends to happen are that these end up being more of a trap to get people into a bit of a spiral of debt It can happen with loans but with credit cards they are designed in that way to try and encourage people I've met so many people who have debts and I've been in the same situation in the past and it normally is because of credit card debt that starts the cycle off

So which is best? There is no definitive answer but loans a generally better for long-term purchases

Source: Youtube

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